Category: Agriculture

Agriculture is one of the country's most significant productive sectors, however, the sector faces greater risks compared to other productive sectors of the economy. The risks include lack of access to finance and low-rainfall seasons that often leads to droughts. The risks have made both crop and livestock farming challenging, leading to high instability in agricultural production. During times of drought, communal farmers are the most affected when it comes to any shocks in the production or value chain systems. The agricultural sector percentage share to Gross Domestic Product (GDP) for the years 2015, 2016, and 2019 recorded declines of 3.8%, 3.6%, and 4.2% respectively (See figure 1). The below-normal rainfall since 2013 is consistent with a declining trend in agricultural productivity and the debt level which has heightened fears of food insecurity. The funding of agriculture is a major bottleneck in expanding agricultural production.  Although Agribank’s loan disbursements over the years have increased, additional investment in agriculture is needed to fully unlock private sector investment and domestic productive capacity (See figures 2 & 3).

Domestic agricultural debt has significantly increased over the years. During the period under review, the accumulative figure extended to agriculture in credit by the Agribank and commercial banks stood at about N$ 22 billion and was recorded in 2019 owing to a decline in primary agricultural production as a result of droughts that led to the massive loss of livestock (See figure 4). The productivity and revenue of farmers that use agricultural loans increase depending on their timely and sufficient use of inputs. Namibian farmers’ ability to repay loans is negatively affected by fewer herd sizes to market coupled with recurring drought and long-term debt as they rebuild their herds.

According to Agribank of Namibia (2022), the agriculture sector is expected to remain resilient in 2023, owing to better rainfall for crops and improved rangeland conditions for livestock farmers. Farmers are encouraged to continue diversifying their farming operations to minimize the risk of climatic, sectoral, or economic shocks on production output and sales. Investments in the agriculture sector are essential to boost productivity, precisely focusing on technological change and climate-resilient production techniques.

Figure 1: Agriculture sector % share to GDP, (2013-2021)

Figure 2: Commercial vs Agribank loans, N$ billion (2010-2021)

Figure 3: Agribank’s Historical Advances vs Non-performing loans, N$ billion (2010-2021)

Figure 4: Cumulative domestic agriculture debt and %YOY Growth, N$ billion (2011-2021)

Background

The agriculture, forestry, and fishing sector were not spared from the pressure of the market distortions that resulted from price volatility and value chain disruptions particularly caused by the transportation component. High energy demands that have been causing fuel, oil, and energy prices to increase have negatively affected the agriculture sector. The agriculture, forestry, and fishing sector share of GDP for Q3 of 2022 declined to 6.4% from 12.9% recorded in Q2 of 2022. Livestock accounted for 3.4% of GDP, followed by the fishing subsector (2.3%), and crop subsector (0.4%). The forestry subsector was the least contributor recording 0.3%. Export earnings for agriculture, forestry, and fishing products amounted to N$ 3.7 billion for Q3 of 2022 while the import bill stood at N$ 1.3 billion. Fisheries products continue to account for the highest foreign earnings at N$ 2.7 billion followed by agriculture commodities valued at N$ 606 million.

Analysis

Fisheries Products

The fishing sub-sector is one of the important sectors in the economy as it is an important source of foreign earnings for the country. During the period under review, hake was the top exported product with earnings valued at N$1.2 billion, followed by tilapia (N$ 1.6 million), and salmon (N$ 0.5 million). The top three export markets were Spain (52.1%), France (12.7%), and Italy (9.6%). In terms of import, tilapia was the main imported product valued to the tune of N$1.5 million. South Africa accounted for 38% of fish fillets and other fish meat imports.

Agriculture Commodities

The trade of vegetables dominated the trade flow of agricultural commodities. During the quarter under review, the value of exported vegetables increased from N$ 101.1 million in Q3 of 2021 to N$ 151.5 million for Q3 of 2022. Tomatoes and onions were the most exported vegetable types, recording values of N$ 71.3 million and N$ 37.6 million, respectively. South Africa claimed the highest share of 76.2%, followed by Angola (20.3 %) in terms of the export market.

Live Animals

International demand for Namibian live animals stood at N$ 400.2 million in Q3 of 2022, a decline when compared to N$ 440.3 million recorded in Q3 of 2021. The decrease in exports came as a result of the border closure for livestock exports to South Africa. Cattle, sheep, and goats contributed the most value of export of live animals in Q3 of 2022, recording N$ 258.0 million, N$ 100.4 million, and N$ 28.5, respectively. The relatively lower cost of farming encourages the export of Namibian live animals to feedlots in South Africa.

Figure 1: Agriculture, forestry, and fishing sector % share to GDP, (2021Q3 – 2022Q3)

Figure 2: Top export of live animals in (N$) million, (2021Q3 – 2022Q3)

Background

According to the agriculture, forestry, and fishing sector statistical bulletin first quarter of 2022, the value-added for the agriculture, forestry, and fishing sectors for the first quarter of 2022 was estimated at around N$ 3.3 billion in nominal terms (7.2% of GDP) (See figure 1 below). The country’s export earnings from commodities in the agriculture, forestry, and fishing sector amounted to N$ 4.0 billion whereas the import bill stood at N$ 1.1 billion. Total export earnings increased by 11% in relation to the same quarter last year. Fisheries products accounted for the highest foreign earnings at N$ 3.1 billion followed by agriculture commodities which brought income of N$ 564.8 million. This is an indication that Namibia is a net exporter of agriculture, forestry, and fishing commodities (See figure 2).

Analysis

Trade for the fish sector

During the period under review, the fishing sector dominated the export of agriculture, forestry, and fishing commodities for Namibia. Total fish and fish products exported amounted to N$ 3.1 billion accounting for 75.5% of total commodities exported. Total fish and fish products exported rose by 7.4% when compared to the same quarter last year. Horse Mackerel was the main species exported with export earnings of N$989.9 million, followed by hake (N$103.1 million) and albacore (N$44.9 million). The import bill stood at N$ 194.6 million. The import bill increased by 27.7% relative to the same period last year. Sardine was the top imported species with an import bill of N$100.8 million, followed by hake and tilapia with N$18.8 million and N$12.1 million respectively.

Agriculture Trade Pattern

Namibia exported live animals valued at N$ 384 million in quarter 1 of 2022 and exports were dominated by live cattle followed by sheep and goats that were mainly destined for South Africa, the United Arab Emirates, Angola, Botswana, and Zimbabwe. The export of live animals accounted for about 68.2% of total agricultural commodities exported. On the import side, the country imported live animals valued at only N$ 30.7 million. 

During the first quarter of 2022, fruits and nuts accounted for about 81.2% of total agricultural commodities exported with grapes, dates, and “mangoes and guavas mangosteens” being the top three exported products in the category. The international demand for Namibian fruits and nuts stood at N$145.7 million while imports amounted to N$84.0 million. The top three imported products under the ‘fruits and nuts’ category were apples, bananas, and grapes with an import value of N$22.1 million, N$9.7 million, and N$8.5 million respectively.

Trade of wood and articles of wood

During the period under review, the country exported wood and articles of wood valued at N$ 322.4 million. The import bill for wood products amounted to N$ 104.6 million. The export of wood products is dominated by wood charcoal which accounted for 88.6% of total wood products exported. 

It is clear that there is a market for Namibia for these commodities, thus it is imperative to invest in these sectors. Investment in these sectors could create high employment opportunities, especially for the youth and these will also help increase production and grow the economy. Additionally, the beneficiation and value addition to all agriculture, forestry, and fishing commodities in the domestic market should be explored for economic growth.

Figure 1: Agriculture, Forestry, and Fishing sector % share to GDP (2021Q1 – 2022Q1)

Figure 2: Top exported Agriculture, Forestry, and Fishing commodities for Quarter 1 of 2022

Background

Mahangu, also known as pearl millet is one of the most common staple food crops in Namibia contributing largely to the overall food security of the country. About 95 percent of mahangu is locally produced and 5 percent is imported from India. The mahangu production for commercial purposes is concentrated mainly in the Zambezi, Kavango and Otjozondjupa region. Producers in the Oshikoto, Oshana, Ohangwena, and Omusati region produce mahangu primarily at a subsistence level for household consumption and only market when there is excess supply. The marketing of mahangu for Namibia commences on the onset of quarter 1 annually and run until it is secured by the National Strategic Food Reserve and producers.

Analysis

The production of mahangu has been driven by demand over the years with a gradual increase in local production (See figure 1). The period between 2010/2011 and 2020/2021 saw local mahangu production at 14 796 tons which translate in 1345 tons per year. The season of 2020/2021 recorded the highest production of mahangu over the period under review on the back of good rains at the beginning of this year.

The Zambezi region account for 31 percent of the national total tonnage of mahangu produced, followed by the Oshikoto region with 24 percent and Otjozondjupa region accounts for the lowest production of mahangu of 1 percent (See figure 2). Mahangu is currently the least imported grain due to the fact that it is highly adaptable to low rainfall and the prevailing soil conditions in Namibia.

Figure 1: Mahangu (2010-2021)

Figure 2: Mahangu production tons per area (2020/2021)

Outlook

The outlook on the local production of mahangu for Namibia is positive due to the above-average rainfall reported in the country for the current harvesting season. There is definitely room for building the necessary efficiencies in order to export this Namibian product. There is currently no risk to the supply of mahangu as a consequence of the social unrest that South Africa experienced over the past weeks, as Namibia does not import the product from the neighboring country.

Recommendations

The relatively low production of mahangu in the past 10 years can be attributed to a number of facts which include supply constraints such as, lack of farming equipment, machinery, and financial resources. In order for Namibia to scale the current production level and have a comparative advantage for the export market there is a need for investment in research and development, training and acquiring knowledge in the use of new farming techniques. Additionally, it is also important that the financial services providers help farmers with the needed financial resources to boost production. This will enable farmers to be more competitive in the context of the new dawn around AFCFTA.

Background

Wheat is the second most-consumed staple food after maize in Namibia, yet the local production capacity is not sufficient to meet local consumption and thus Namibia is a net importer of wheat from country as far Russia and Poland who collectively accounts for almost 60 percent of its imports. The main products that contain wheat as the main ingredient include bread, pizza, beer, pasta, and noodles. The production of wheat for Namibia takes place in Kavango, North Central, Central, Karst (Otjozondjupa region), and South production areas under the irrigation system.

Analysis

As from the year 2010 until 2021 Namibia imported a total of 1 090 409 tons of wheat valued at N$ 6 172 227 432.23. A total of 112 020 tons of wheat was produced locally during the period under review. The largest production of wheat was recorded during the 2012/2013 period, with 14 819 tons. Wheat production has declined significantly over the years recording the least production during the year 2019/2020, with 4 466 tons of wheat for the entire year. See figure 1 below. Factors that are attributed to a low production of wheat for Namibia include high production costs and unfavorable climatic conditions.

During the year 2020/2021, local production accounted for 37 percent of total demand and the rest of 63 percent of wheat was imported at the value of N$ 64 074 256. The biggest production of local wheat occurred during the months of October 2020 to January 2021. See figure 2 below. The country’s constant shortage of wheat has led to an increase in the domestic prices of wheat by 15 percent during the 2020/2021 marketing season. The domestic price escalation was also attributed to an increase in global wheat prices and the supply chain disruptions caused by the Covid-19 pandemic.

Figure 1: Wheat (2010-2021)

Figure 2: Wheat (April 2020-March 2021)

Outlook

We anticipate that the local production of wheat will remain subdued for May and June 2021 due to the fact that wheat is cultivated winter time. The production of wheat will increase during the fourth quarter of 2021 into the first quarter of 2022 as a result of good rains received. The importation of wheat from South Africa in the coming months will be affected due to supply chain disruptions as a result of the social unrest that occurred in the country in the past weeks.

Recommendations

Local producers must take complete advantage of the marketing schemes implemented by the Namibian Agronomic Board (NAB) to successfully market wheat. In order to boost the local production of wheat investment in improved seeds, fertilizers, water availability and training is vital. It is also important that commercial and development banks provide crop producers with tailor fit financing. This will furthermore enable farmers to be more competitive in the context of the new dawn around AFCFTA.

Background

White maize is one of the most important staple food crops in Namibia. The country produces white maize both under rain-fed and irrigation mainly for human consumption, but it has become an important input for animal feed for farmers. White maize is the main source of calories for the majority of households in Namibia other food products include corn flakes (corn puffs) breakfast cereals or snacks such as popcorn to name but a few. The production of white maize takes place in Zambezi, Kavango, North Central, Karst (Maize triangle), and the Central and South production zones. White maize is cultivated from October to December each year and harvested from April to October each year. Namibia’s climate is distinctly arid in the greater parts of the country, affecting the local production of white maize, thus resulting in seasonal fluctuation of production marketed.

Analysis

The production of white maize has increased over the past years, although considerable declines have been recorded in 2013, 2015, and 2019 as a result of drought. Drought spells have become a common feature in Namibia and this has led to a decline in agricultural production. During the year 2015, Namibia experienced severe drought which led to a fall in the local production of white maize by 35 percent relative to the year before. The domestic production of 43,948 tonnes of white maize accounted for nearly 30 percent of the domestic demand. The supply shortage for white maize is continuously covered by imports from South Africa as the country’s production does not meet the demand for white maize. See figure 1 below.

Figure 1: White Maize (2010-2021)

During the year 2020 Namibia reported above-average rainfall which resulted in good harvests recorded for the months of May and June 2020. Figure 2 below shows that during the period of 2020/2021, the largest portion of white maize produced came from the Karst production area recording up to 59 percent of white maize. The Hardap (South) production area had zero production of white maize due to water shortage. The country banned the importation of white maize from 01 June to 19 October 2020 to allow producers to market white maize. As a result, local demand exceeded local supply by September 2020 due to a depletion of white maize, leading to the importation of white maize starting as early as October than anticipated. See figure 3 below.

Figure 2: White maize production tons per area (2020/2021)

Figure 3: White Maize (April 2020-March 2021)

Outlook

The outlook on the local production of white maize for Namibia from April to June 2021 which is considered as the time for harvesting is positive due to good rains that the country reported in the early months of 2021, bumper harvests are expected for white maize. However, with South Africa being the leading partner for the trade market for agricultural commodities for Namibia both imports and exports accounting for 65.7 and 78.8 percent during the first quarter of 2021, should local demand outweigh local production the country will need to import white maize to meet local demand. We anticipate that the importation of white maize from South Africa in the coming months will be negatively affected due to road infrastructure and supply chain disruptions as a result of social unrest that occurred in South Africa during the past weeks.

Recommendations

Namibia remains a net importer of white maize due to supply constraints faced by the farmers and bad climatic conditions. In order for the country to boost local white maize production to meet local demand and become global competitive in the white maize production, we recommend the country increase investments in higher-yielding seeds, expand of planting of white maize, and make use of other efficient farming techniques to increase production.